What is E-retailing? Role of Website, Limitations

  • Post last modified:15 January 2024
  • Reading time:16 mins read
  • Post category:Business

What is E-retailing?

E-retailing, also known as e-commerce or online retailing, refers to the buying and selling of products or services through the internet. E-retailing involves the use of online marketplaces, websites, and mobile applications to connect buyers and sellers, facilitate transactions, and deliver products or services to customers.

E-retailing has become increasingly popular in recent years due to the convenience it offers to consumers, who can shop from the comfort of their homes or on the go using their mobile devices. E-retailing also provides retailers with access to a wider customer base and the ability to offer personalized shopping experiences based on customer data and preferences.

The Internet has influenced our lives to a large extent in terms of communication, resource sharing, and managing tasks across the globe in a single stage. Similarly, in retail, the Internet has brought revolutionary changes in the way retailers used to conduct their businesses earlier. Before discussing the importance of the Internet in retail, let us first discuss the meaning of the term ‘retailer’ and ‘retailing’.

A retailer is a reseller who acquires products from wholesalers or manufacturers and sells them to consumers. This process of purchasing products from manufacturers and selling them to end users for their personal or household use is called retailing. Thus, retailing is an act of selling products/services to end-users. Walmart, Pantaloons, Big Bazaar, Bata, Reliance Retail, and Koutons are a few examples of popular retailers.

The Internet, on the other hand, is a system that interconnects different computer networks through the Internet Protocol (IP) Suite to serve billions of users across the world. It allows users to exchange data, ideas, news, and opinions with each other from any location in the world.

In retail, the Internet has enabled retailers to get in touch with manufacturers, wholesalers, and customers from distant locations without spending too much time or effort. These significant changes in retail have led to the evolution of the term ‘Internet retailing’ or ‘e-retailing’.

Internet retailing is defined as a form of e-commerce, whereby consumers can purchase retailers’ products and services over the Internet. In some instances, the term ‘Internet retailing’ is used synonymously with ‘online shopping’ and ‘online retailing’. Internet retailing has not only ensured the growth of retailers but has also helped retailers to reach out to the maximum number of consumers in a short period.

In recent years, India has also witnessed the significant impact of Internet retailing. Various online retail giants, such as eBay. com, Flipkart.com, and Myantra.com have attracted a large number of Indian consumers within a very short period.

In the past few years, Indian consumers have experienced the significant impact of online shopping. According to a report presented by The Associated Chambers of Commerce and Industry of India, in 2012, India has been identified as the fastest-growing online market with around 41 percent rise as compared to China, Brazil, and Russia (Daily Deal Media—Daily Deal News & Site Reviews | Industry Data & Reports| Merchant Resources (2012).

e-Commerce Catapults Amongst Youth Throughout India). Internet retailing targets consumers from different regions, ages, and tastes. In India, around 75 percent of online consumers are aged 35 years or less.

From the perspective of online shopping, Internet retail players had close competition from July 2011 to July 2012. It has been observed that in July 2012, about 37.5 million Indian consumers visited the key retail websites.


E-retailing and Online Shopping

It is a question of debate whether customers find online shopping as useful and enjoyable as shopping in physical stores. A customer cannot feel, touch and try products while shopping from virtual stores. The absence of direct experience makes customers less assured about products offered at virtual stores; thus, they may not be willing to purchase products from these stores.

An e-retailer can handle such concerns of the customers at the time of designing the virtual retail store, where they can use multiple emerging technologies, such as an audio explanation of products, 3-D visualization of products, and haptic information that add extra sensory stimuli in the online shopping experience of a customer.

Let us see the various elements that play an important role in e-retailing and online shopping:

Presence With the Product

Today, retail stores are using Web-based Virtual Reality (VR) technologies to provide a virtual experience to consumers. This enhances their feeling of presence with the product. Such technologies include Macromedia Flash, Apple QuickTime, and Java 3-D APIs to help online customers in trying products virtually.

For example, at Olympus’ virtual store (dealing in digital cameras, audio recorders, and binoculars), customers can see a three-dimensional image of products to gauge the products from different angles.

Similarly, the website of Land’s End helps customers to try clothes on customized virtual mannequins to see whether the clothes suit those dummies that resemble the customer’s physique.

Presence of a Service Representative

Online shopping usually has very limited scope for interaction with sales representatives as it is a self-service activity. However, a customer might have several doubts regarding a product that he wants to clear before or after purchasing. This creates a need for the customer to interact with online vendors to obtain the answers to such questions.

Though e-retailing does have interaction options, clicking on hyperlinks, filling in forms, or sending e-mails seems tedious to most customers. For such customers, it is not as natural as it is talking to a salesperson at a physical store.

To address this concern, e-retailers are employing a new feature in virtual store design that is known as Live Help or Live Support. This feature assists online shoppers to chat with the help of a browser-based instant messaging tool. In live support, a representative responds to questions related to products or services in real time. This assists customers in making purchasing decisions.

Presence of an Intelligent Agent

Today, e-retail stores are designed with various sophisticated artificial intelligence technologies. These technologies are taking over the services delivered by service representatives at a physical stores. Online retailers nowadays design virtual service representatives on the homepage of their online stores to welcome customers and provide information regarding various products.

A virtual service representative or recommendation agent can help customers in screening the set of available alternatives and find products that best suit their requirements.

Presence of Co-shoppers and Other Customers

Many customers prefer to shop in brick-and-mortar stores just because it is not a solitary action but a joint and sociable experience. Customers prefer such an environment as they can get assistance from others; or can just get an opportunity for social interaction. However, as online shopping is an individual-focused activity, it is difficult for customers to get engaged in social interaction.

To deal with such concerns, online retailers now employ textual or Voice over Internet Protocol (VoIP) chat. This assists customers in communicating and collaborating with others. Collaborative browsing is another software-enabled technique that retailers are using to help customers in interacting with their friends with a shared browser. Such shared browsing can significantly enhance customers’ online shopping experience by making it more enjoyable.


Role of Website in E-retailing

The success of an Internet retailer largely depends on the effectiveness and user-friendliness of its website. The following points explain the role of websites in online retailing:

Digital Identity

Websites provide valid web addresses, names, and contact information of retailers to customers so that they can easily purchase products or services. This helps retailers in building their digital identity among customers.

Meaningful Information

A website conveys meaningful information to consumers about products and services being offered by retailers. This ultimately helps consumers in making their buying decisions. A website informs customers about product features, prices, categories, availability, payment options, and delivery information. Retailers also provide information related to their history, achievements, and awards, on their websites, which help customers in getting an idea about the market image of retailers.

Customer Acquisition

In today’s competitive business environment, retailers need to attract customers within a very short period. An attractive website is characterized by a colorful homepage, animated displays, stylish buttons, organized navigation, and eye-catching content. Many websites also include audio with the display.

Customer Feedback

Retailers should get feedback from customers to improve their performance. Websites help retailers to receive customers’ feedback quickly in the form of customer testimonials. In addition, positive feedback acts as indirect marketing to new visitors.

Time Saving

Websites save the time of both retailers and customers. Using websites, retailers can reach out to the maximum number of customers in a short period. On the other hand, websites also provide information on products and services to customers in one place. Thus, websites play an important role in reducing the time spent on one-to-one marketing and product browsing.


Limitations of E-retailing

Although e-retailing provides significant growth opportunities for organizations, there are certain challenges to it. These are as follows:

Security Concerns

e-retailing is dogged with threats related to online security and fraud in monetary transactions via the Internet. Most customers still do not consider it a safe method and are reluctant to share their account or credit card details on websites.

Shopping Experience

In e-retailing, customers cannot touch, smell or taste items they would like to purchase. In addition, for most people, shopping is a way of outing with the family. Therefore, they prefer to shop via traditional stores instead of through websites.

Mode of Transaction

e-retailing is not preferred by people who are unaware of the various aspects of online transactions. Such customers might find online transactions quite complex, and, thus, prefer buying from physical stores.

Navigation Fallacy

An e-retail website does not have the same look and feel as physical stores, with which customers are familiar. To shop on a website, customers need to first understand the navigation rules of the website before purchasing items.

Article Source
  • Glover S., Liddle S., Prawitt D. (2001). e-Business. Upper Saddle River, NJ: Prentice Hall.

  • Gupta V. (2006). e-Business. New Delhi: Research Book Center.

  • Khosrow-Pour M. (2007). Utilizing and managing commerce and services online. Hershey, PA: Cybertech.

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